New Bill targeting Apple App Store will harm app ecosystems and consumers

The “Open App Markets Act” could cause severe trauma to the App Store ecosystem, a think tank warns, with the proposed legislation potentially damaging the value of iOS and Android as platforms for consumers.

Both the Senate and U.S. House of Representatives want to limit the market power of digital storefronts such as the Apple App Store or Google Play Store. The bill included several measures that could lower the market power tech giants.

This includes a ban on apps that require developers to use their payments system, another ban for app shops punishing app shops for offering different pricing structures via other platforms as well as a ban of app stores using non-public information to compete with third-party app stores

Non-resident fellow Mark Jamison, writing for the American Enterprise Institute (a think tank on public policy), argues that the legislation shows how lawmakers can “mistake great products for market power.” 

Jamison, the director and Gunter Professor of the University of Florida’s Public Utility Research Center, is also the chairperson of Florida’s Internet taskforce.

The bill’s sponsors believe that Apple and Google are “incredible powers” and are depriving startups of an opportunity to succeed by adopting practices that “directly oppose an open and fair marketplace.” 

Jamison’s working paper, which examined how startups choose to use iOS, Android or both platforms, found that most firms surveyed considered iOS and Android “clear substitutes or even complements” each other. This suggests that Apple and Google are competing for startups’ business.

Jamison stated that some people have clear preferences for iOS or Android, while others are unsure if mobile platforms will be used. Jamison stated that this “also implies no market strength.”

In direct contradiction of senators’ claims, the working paper revealed that the app economy is “vibrant and robust”. Since the introduction of iPhone, U.S. startups have experienced rapid growth.

It was also determined that app publishers were paid more than $2,000,000 in 2020. The American use of apps that relate to finance increased by 90 span>

Jamison explains that market power refers to the ability to raise prices or suppress output without inviting competitors. Jamison says, “And their fees appear on par with platforms. Jamison adds, “And their fees seem on par with platforms.

Jamison believes, however, that the bills will “ironically,” reduce the value consumers receive from the platforms, because they “run contrary to consumers’ wants.” Jamison believes that the bills will “ironically” reduce the value consumers get from the platforms because they “run counter to consumers’ desires.”

Google allows sideloading of apps from its app store, while Apple does not. Because some developers and consumers prefer these options, this is why.

He says that Google caters only to techies, while Apple is geared towards people who love their simple, easy-to-use gadgets.

Jamison refers to the Thomas Sowell illusion of the “anointed”. Jamison says that when they see a system that is flawed in any way, they “conclude they should impose that vision on others, without realizing that their lack knowledge will only make matters worse.” Jamison continues to refer to the Thomas Sowell “anointed” illusion, in which when they see a system that is wrong in some way, they “conclude that others should impose their vision on them, not realizing that their lack of knowledge will make things worse.”

These bills are coming at a time App Store is being closely scrutinized.

Apple is also waiting for a decision to be made in its legal battle with Epic Games, over its App Store guidelines and commission tiers.

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